To The Moon

Last Week's Recap

The US Market - S&P 500, Nasdaq hit market rally highs

• The stock market rally gained momentum amid tame inflation data that sent the dollar tumbling.

• The S&P 500 and Nasdaq hit fresh 52-week highs while the Dow notched its best performance since March, as strong earnings results from the big banks and companies kicked off earnings season.

• The Nasdaq exchange announced an upcoming special rebalance to the Nasdaq 100 index that will reduce the weight of Microsoft (MSFT), Nvidia (NVDA) and more, to avoid over-concentration.

• The headline CPI for June rose 3% year-over-year, the lowest level since March 2021. The core CPI, excluding food and energy, eased to 4.8% from 5.3% on an annual basis.

• The PPI rose just 0.1% on the month. Along with downward revisions to May data, that cut the wholesale inflation rate to practically nothing: 0.1%. The core PPI also rose a tame 0.1%, lowering the 12-month inflation rate to 2.4%.

The US Sectors & Stocks - All S&P 500 sectors post weekly gains

• All S&P 500 sectors gained for the week, as the basic materials sector was the best-performing sector by more than 4%.

• UnitedHealth (UHN) lifted the blue-chip index Friday as its top performer. The insurance giant jumped more than 7% after it reported better-than-expected adjusted earnings and revenue. The company also raised the lower end of its full-year adjusted earnings guidance.

• JPMorgan Chase (JPM) and Wells Fargo (WFC) handily beat Q2 views, while Citigroup (C) slightly topped. JPMorgan, benefiting from its First Republic Bank bailout acquisition in May, reported a 72% EPS gain while revenue leapt 34% to $42.4 billion. Wells earnings leapt 67%, with revenue growth accelerating to 20%. Citigroup earnings tumbled as revenue edged lower. reported strong net interest income. All beat net interest income estimates, with JPMorgan raising its NII guidance. JPM and WFC rose solidly for the week. Citi reversed lower Friday on earnings, paring weekly gains.

• Amazon.com (AMZN) said its 48-hour Amazon Prime Day sales event was its biggest ever, with July 11 the single largest sales day in company history. Prime members purchased more than 375 million items worldwide during the event, up from over 300 million items in last year's promotion.

• Delta Air Lines (DAL) topped Q2 views, with revenue increasing 19%, with international travel revenue soaring 61%. Domestic passenger revenue climbed 8%. The carrier also raised its full-year guidance. Delta shares jumped, with other airline stocks rising.

• Roku (ROKU) announced a partnership with Shopify (SHOP). The arrangement will allow viewers on Roku's streaming video platform to buy products from Shopify merchants through their TVs using their remote controls. Roku stock surged while Shopify rose solidly, both flashing buy signals.

• Activision Blizzard (ATVI) stock rocketed after a federal court allowed Microsoft (MSFT) to proceed with its $69 billion acquisition.

• Tesla (TSLA) built the first Cybertruck at its factory in Texas, rolling out the futuristic electric pickup nearly four years after the prototype was introduced.

• Salesforce (CRM) will lift prices by an average of 9% for most software products in August, its first hikes in seven years. The Dow Jones giant sells software under a subscription model, covering sales, customer relationships, marketing, e-commerce and data analytics. CRM stock soared. The Salesforce price hike also appeared to buoy many other software plays.

Hong Kong Market - The Tech index rallied 8.4%

• Hong Kong stocks delivered the best week in six months as investors bet on stronger stimulus injection after China signalled its concerns about the nation’s faltering economy.

• The Hang Seng Index rallied the week to 5.7%, while the Tech Index completed an 8.4% weekly gain, the most in seven months.

• The rally restored more than US$180 billion of capitalisation to the city’s stock market this week.

Singapore Market - STI post w 3.5% weekly gain

• Singapore shares rallied as risk appetite surged. The Straits Times Index (STI) put up a stellar showing this week with gains of 3.5%.

• Singapore's economy narrowly escaped a technical recession after posting modest growth in the April to June period, preliminary government data showed on Friday. On an annual basis, the economy expanded 0.7% in the second quarter, Ministry of Trade and Industry advanced estimates showed. The government had projected GDP growth of 0.5% to 2.5% for this year.

• A rare Singapore graft probe involving a cabinet minister widened Friday after a property and hotel tycoon Ong Beng Seng was issued a notice of arrest in connection with the case. The case is the most serious linked to a senior politician in 37 years.

Australian Market - The ASX 200 index rallied 3.7%

• The Australian share market enjoyed a winning week, following a positive lead from the US market. The ASX 200 index rallied 3.7% to 7303.10. And the technology sector came out the best.

• The RBA will release its Board minutes from the July 4 meeting the week ahead, which held interest rates steady at 4.1%.

The Week Ahead

Macro Factors - Tesla, Netflix, banks on focus

• Earnings season will be in full swing, and the economic data will be light in the week.

• However, June retail sales data is on the docket on Tuesday, and will give insight into the state of consumer spending. Investors are watching for any signs of weakness as fiscal stimulus savings are exhausted, and borrowers resume student loan payments in the fall.

• A cross-asset “everything rally” that was the biggest in three years last week. Retail investors, who got burned by 2022’s bear market, are staging a comeback. Meme stocks had their best week since January, while unprofitable tech firms jumped 11%. “I don’t know the staying power of the ‘junk rally,’ because it’s more sentiment driven — it’s not fundamental driven,” said Abby Yoder, US equity strategist at JPMorgan Private Bank. “Regardless of whether you’re in the camp of us going into a recession or a camp of a soft landing, the reality is that growth is probably slowing.”

Earnings

• Financials kicked off earnings season last Friday. Large banks like JPMorgan (JPM) and Wells Fargo (WFC) topped analyst expectations as JPMorgan reported a 67% increase in profits in the second quarter.

• Wall Street dealmaking will be in focus this week as Bank of America (BAC), Morgan Stanley (MS), and Goldman Sachs (GS) will each report results. All are expected to show drops in investment banking and trading from the first quarter.

• Investors will be particularly keen to hear from Goldman Sachs CEO David Solomon amid concerns about the health of the Wall Street institution after job cuts and reports of internal pushback about the bank's strategy.

• On the tech front, Tesla (TSLA) and Netflix (NFLX) will release results on Wednesday, for the sector at the center of this year's market rally.

• With its stock up nearly 130% this year Tesla has seen investors react both to AI-related hype around its self-driving capabilities as well as strong vehicle delivery figures and the rapid expansion of its Supercharger network with industry competitors. Goldman Sachs analyst Mark Delaney noted in a note on Thursday that the "primary focus will be on its non-GAAP auto gross margin" as investors weigh how recent price cuts are impacting Tesla's profits.

• Netflix stock is up a relatively more measured 50% this year, but investors will be keen for commentary from company executives on how any fallout from work stoppages in Hollywood are weighing on the company's plans with the streaming business appearing to be at an inflection point.

• Broadly, earnings for S&P 500 companies are expected to decline 7% this quarter, which some analysts believe will mark the bottom of the current earnings recession. those low expectations could leave room for positive surprises, as was the case in the last earnings season. Some market participants expect this period could mark the trough for earnings, and urge traders to pay more attention to forward guidance.

Tesla 2023Q2 Earnings Call

Netflix 2023Q2 Earnings Call